PFMP · Question #607
Assume your automotive company is new to formal portfolio management. It has had for years a strategic plan and tries to be first to market for new and improved features on its vehicles each model yea
The correct answer is A. The criteria to optimize the portfolio may be the same as that used in the scoring model. The correct answer is A - The criteria to optimize the portfolio may be the same as that used in the scoring model. Portfolio optimization builds on the same strategic criteria and value dimensions used to score and prioritize components during selection. For example, strategic a
Question
Assume your automotive company is new to formal portfolio management. It has had for years a strategic plan and tries to be first to market for new and improved features on its vehicles each model year. You were hired as the portfolio manager to provide a more disciplined approach for determining new products to pursue as well as existing ones that should be terminated. So far, you have set up an approach, established categories for the various components, and determined a method to rank and score new proposals for consideration. Now you are working to set up practices to follow to optimize the portfolio. In doing so, it is important to note that:
Options
- AThe criteria to optimize the portfolio may be the same as that used in the scoring model
- BA portfolio management information system should be set up
- CFuture investment requirements are a key criterion to consider
- DCompliance with organizational standards cannot be overlooked
How the community answered
(31 responses)- A84% (26)
- B10% (3)
- C3% (1)
- D3% (1)
Explanation
The correct answer is A - The criteria to optimize the portfolio may be the same as that used in the scoring model. Portfolio optimization builds on the same strategic criteria and value dimensions used to score and prioritize components during selection. For example, strategic alignment, financial return, and risk level may be used both to score new proposals and to evaluate how the overall mix of components should be balanced during optimization. While a PMIS, future investment requirements, and compliance standards are all relevant considerations in portfolio management, the key insight here is the continuity between scoring criteria and optimization criteria - they are not necessarily separate frameworks.
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